More than 16 months after the start of the intifada, Israel's long dormant left-wing and pro-peace lobby has declared that the "peace camp is going back to the streets", as rumblings increase over the conduct of Ariel Sharon's government and the army.

More than 25 grassroots political organisations fired the opening salvo of the new campaign by gathering in Tel Aviv on Saturday to protest against the government's handling of the intifada and to demand Israeli withdrawal from the occupied territories.

As the crowd unfurled banners lambasting Israel for assassinating Palestinians, uprooting orchards, and demolishing homes, activists were distributing thousands of leaflets across Israel calling on soldiers to refuse to serve in the West Bank and Gaza Strip.

One year after Mr Sharon, an ex-general with a dark past, was elected prime minister by a landslide, his opponents – led by the left – are finally beginning to mobilise. Another demonstration is being organised for next weekend.

Mr Sharon returned home from the United States yesterday to new stirrings of dissent, having failed to persuade the Bush administration to cut ties with Yasser Arafat, the Palestinian leader, and support his drive to create an alternative Palestinian leadership.

Every day, fundamental questions are being asked in public by Israelis about what is being done in their name. "For the first time we are seeing the beginnings of some form of movement on the part of the left," said Professor Benjamin Isaac, a history lecturer from Tel Aviv University, who was among the 5,000 people at Saturday's protest for peace.

So far, Mr Sharon's position in the polls remains impressive. A survey last week, commissioned by the Yedioth Ahronoth newspaper, found that 68 per cent of respondents rated his performance as good, although he has not fulfilled his election promise of providing the country with peace and security.

But other results reflect a growing public unease in specific areas. Sixty-six per cent of respondents said the policy of assassinating Palestinian activists – "targeted killings", as the poll euphemistically called them – either increased Palestinian attacks on Israelis, or had no effect on them.

The tone of Mr Sharon's critics has also hardened significantly. When the Israeli army demolished 60 homes in Rafah, southern Gaza, last month and then attempted to lie about it, the word "war crime" began to appear in the Israeli press.

This refers not just to the fact that the Prime Minister is facing possible indictment in a Belgian court for his role in the massacre of Palestinians at the Sabra and Chatila refugee camps in Lebanon in 1982, but also to his army's conduct during the intifada.

Banners flourished during Saturday's protest made the same point. "From Oslo to The Hague", said one. "Don't say – I didn't know", said another.

Among those raising awkward questions over Israel's policy is Ami Ayalon, the head of the Shin Bet security services during the government of Ehud Barak. He has challenged one of the core myths circulated by Israel about the cause of the conflict – the claim that Mr Arafat launched the intifada after rejecting a generous peace package from Mr Barak at Camp David in July 2000. There was "no serious discussion" at Camp David, Mr Ayalon told an audience recently.

A crucial role in Israel's changing mood is being played by army reservists who have signed a petition saying they will refuse to do their annual service, of up to a month a year, in the occupied territories.

By yesterday, the number of reservists signing had risen to more than 200, in defiance of a deeply uneasy army leadership. Lieutenant-General Shaul Mofaz, the chief of staff, has suggested the protest could amount to sedition.

The boycott has also rattled Mr Sharon's coalition with the Labour party. If his grassroots opponents succeed in awakening opposition to the government among the mainstream public, then the coalition will come under serious strain, and no one will be in a more awkward position than Labour's leader, Benjamin Ben-Eliezer. An ex-general who once served as Israel's military governor in the West Bank, he believes there should be no compromise with the Palestinians over Jerusalem.

He supports building Jewish settlements in contravention of international law, and believes in Israel's assassinations policy. Nor does his other job help. It is a reflection of the nation's siege mentality and wheeler-dealing politics that the Labour leader – in a government led by an arch right-winger – should be the Defence Minister.